Washington ? It’s the most exasperating time of the year — tax time.

While President-elect Barack Obama and Congress debate over what could be $300 billion in tax cuts, one can only hope they will also address the mind-numbing provisions of the tax code.

U.S. taxpayers and businesses spend an amazing 7.6 billion hours a year complying with tax-filing requirements, according to data compiled by the National Taxpayer Advocate’s office. In the last eight years, changes to the tax code have been made at a rate of more than one a day — including more than 500 changes in 2008 alone, according to Nina E. Olson, the national taxpayer advocate.

The complexity of the tax code is a serious problem, Olson writes in her 2008 annual report to Congress, released this week.

If you could sum up Olson’s report in one word, it would be simplify, because the tax code’s complexity is costly. About 60 percent of individuals pay professionals to prepare their tax returns.

Another 22 percent of taxpayers purchase tax software. The report estimates that U.S. taxpayers spend $193 billion a year complying with income tax requirements.

Olson reports to Congress that the complexity of the tax code has led to “perverse results.”

“On the one hand, taxpayers who honestly seek to comply with the law often make inadvertent errors, causing them either to overpay their tax or to become subject to IRS enforcement action for mistaken underpayments of tax,” she writes. “On the other hand, sophisticated taxpayers often find loopholes that enable them to reduce or eliminate their tax liabilities.”

Among many recommendations, Olson suggests that Congress repeal the alternative minimum tax provision. The AMT’s goal originally was to target high-income taxpayers who were claiming so many deductions that they owed little or no income tax.

The AMT, a separately figured tax, eliminates many deductions and credits, increasing the tax liability for an individual who would otherwise pay less. By 2010 more than 33 million — a third of all taxpayers — will be subject to the AMT, according to the Tax Policy Center.

Year after year, there are complaints that the AMT is now unfairly snaring the not-so-rich. And year after year, Congress sees fit to only make temporary patches to the provision. More people are being hit because the AMT brackets and exemptions are not adjusted annually for inflation.

Additionally, some of the original provisions seem ludicrous in retrospect. For example, under the regular tax rules, taxpayers can claim deductions for dependents and for taxes paid to state and local governments. However, those deductions are snatched away under the AMT.

What’s maddening is that the AMT requires taxpayers to compute their taxes twice — once under the regular rules, and again under the AMT guidelines — and then to pay the higher of the two amounts.

In her report, Olson speaks for the many people who will find they have a higher tax bill because of debt that has been canceled. Generally, if a creditor forgives a debt, the amount that you don’t have to pay back becomes taxable income.

As Olson points out, Congress has carved out a number of exceptions to the debt-cancellation rule. Except — surprise, surprise — taxpayers often do not receive reliable information about the exceptions.

For example, the Mortgage Forgiveness Debt Relief Act of 2007 has allowed homeowners to exclude debt canceled relating to their mortgage loans. But you can only qualify for the exception for the part of the loan that was used to buy or improve a principal residence. If you used some of the loan to pay off a car loan, credit card balances, student loans or medical bills, you can’t exclude that forgiven debt from income.

In her report, Olson recommends that the IRS create a centralized unit dedicated to handling cancellation of debt issues.

If you’re having a problem resolving your tax issues through normal IRS channels, contact the Taxpayer Advocate Service at (877) 777-4778 or go to irs.gov/ advocate.

There’s a lot happening on Capitol Hill right now. But I certainly hope Olson’s report gets the attention it deserves, especially at a time when so many people are hurting financially.